If you remember nothing else about brokers, at least remember this: Managing brokers is like managing your employees. You need to give them clear direction and agree on goals together. You need their input and participation in goal setting (challenging but achievable and realistic objectives). You need to motivate, incentivize and reward them. You need to pay them on time. You need to review them—give them feedback on their performance so they know where they stand.
Brokers are a great resource. They are experts on their local markets and have the benefit of working with many good lines. They see what works and what doesn’t. If you are smart, you will elicit their input and involvement with your business.
If they are not working out, you need to put them on probation. If they are still not working out, you need to terminate them and move on. In the end, especially if you are a smaller company, you want to get an “unfair amount” of their time—i.e., disproportionate to the commission dollars that you might be paying them at that time.
The best objectives are concise, clearly understood, focused and few in number. Ideally, you will set three to four important objectives over a 90-day period, refine them with the broker and set a date for a review.
Use the old standbys: S.M.A.R.T. goals
If you ask five people what the acronym S.M.A.R.T. stands for, you’ll get five different answers. Generally, though, they mean:
- Specific. Include enough detail that someone else could explain your goal to you. Example: Get three new items authorized at Whole Foods Midwest by Sep. 1.
- Measurable. Include numbers so that you can monitor your progress and tell when you have achieved the goal. Example: Increase third-quarter sales to UNFI Midwest from $100,000 to $125,000.
- Achievable. Make sure the goal can be accomplished. Example: Increase sales in the region by 15% (if that is realistic, versus a hopelessly unrealistic goal).
- Relevant. The goal should relate to your life or business mission. Example: Reset the freezer cases in the Whole Foods stores in the region according to the new planogram by Dec. 1.
- Time-specific. The goal must include a deadline or a rate. Example: "Prepare budget by noon Friday" forces action better than "Work on budget."
Obviously S.M.A.R.T. goals are infinitely better than “increase sales,” “sell in new items,” “set up deals,” etc. After you reach agreement with the broker on three-four S.M.A.R.T. goals for the next 90 days, put them in writing, summarize them and set a review date.
Share information & involve your broker in goal setting
Most brokers see orders and invoices as a way of tracking the overall business and keeping a handle on commissions owed. Better yet is to involve your broker in your budgeting process so they have some authorship of the goals by which they will be measured. Ideally, you will send your account manager reports on how they are doing versus budget and year previous, on critical measures such as net sales, cases by product, and trade spending. In this way, your broker is truly your partner and collaborates with you for mutual success.
Setting objectives are meaningless unless you review them.
- Set a date with the broker.
- Review results against objectives. (None of these should be a surprise since the broker helped set them, received a copy in writing, and is getting regular reports from you in order to see their ongoing progress.)
- If the objectives are being met or beaten—great! Be lavish in your praise and encouragement and if you can swing it, a surprise unexpected bonus or “thank you” gift will pay many dividends down the road all around.
- If they are not, discuss why—are they reasonable and realistic? Are they lame? Is the broker giving you their full effort? Be candid.
- Set goals for the next 90 days.
Incentives, growth programs, SPIFFs
Incentives are sometimes effective if they are focused and for a limited amount of time. For example, you may have a quarterly or annual incentive for the brokerage if they achieve an overall sales level. You may have an incentive for your account manager, such as a trip if they hit a certain growth number. Some companies have “Broker of the Year” awards that may have a cash award and a plaque that goes to the brokerage.
SPIFFs are another one of those acronyms of dubious origin. Legend has it that it stands for “Sales Promotion Incentive Fund,” but no one is completely sure. SPIFFs are best used when offering incentives to the broker, retail reps or distributor reps. It is usually something simple like “place the new flavor and get $5.00 for each store”—generally a fixed dollar amount for doing something specific for a focused amount of time. We have worked with progressive-minded brokers where the owners have matched our SPIFF to their reps.
You can sometimes do creative things such as “double commission on the new flavor for the next 90 days” or something similar to give emphasis to specific objectives. This helps highlight these in the minds of the brokers and motivates them to give these initiatives extra effort.
This content is excerpted from the Natural Products Field Manual, Sixth Edition, The Sales Manager’s Handbook, written by Bob Burke and Rich McKelvey. To learn more about or purchase the Natural Products Field Manual, visit the Natural Products Consulting Institute website.